Excerpt: - - answar ali, air 1959 tripura 40, wherein it has been held (headnote) i it is well settled that a mere breach of a contract cannot give rise to a criminal prosecution. 869) :it is well established that the inherent jurisdiction of the high court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice. a subsequent failure to fulfil a promise by itself is not sufficient to infer a dishonest intention which is an essential ingredient for the offence under section 420 of the ipc......of goods already received is a mere promise to pay on a future date and a broken promise is not a criminal offence, though it may amount in certain business relations to discreditable behaviour.' 3. in the above decision, sadasivan j. has also referred to asad ali tahsildar v. answar ali, air 1959 tripura 40, wherein it has been held (headnote) i ' it is well settled that a mere breach of a contract cannot give rise to a criminal prosecution....the distinction between a case of mere breach of contract and one of cheating, therefore, depends upon the intention of the accused at the time of the alleged inducement.' 4. in sreethara kamath v. jawala prasad gupta [1970] klt 45, krishna iyer j., as he then was, has held :' if a person gives a cheque which is dishonoured and from the.....

Judgment:

K.K. Narendran, J.

1. The accused in C.C. No. 610 of 1979 on the file of the Addl. Judicial Magistrate of the First Class, Ernakulam, are the petitioners in this criminal miscellaneous petition filed under Section 482 of the Cr. PC, 1973. The above complaint was filed by the first respondent herein under Section 200 of the Cr. PC for offences under Section 420 read with Section 34 of the IPC. The first respondent supplied a few lorry loads of scrap iron to M/s. Standard Steel and Allied Products, Bangalore, a business concern run by the petitioners-accused. According to the first respondent, on behalf of the other petitioners, the first petitioner made representations to the first respondent at Ernakulam that the petitioners will make payment for the goods after they are delivered at Bangalore. The lorry charges would be paid as soon as the goods were delivered at Bangalore and the value of the goods would be sent later along with the additional copy of the invoice enclosed with the way-bill. It was under the above arrangement that the first respondent supplied the goods to the petitioners. All the cheques issued for the value of the goods were returned by the bank with the endorsement' refer to drawer '. The complaint in question was filed in respect of the cheque issued by the petitioners on July 2, 1979, on receipt of the first consignment despatched by the petitioners as per invoices datedJune 26, 1979, and which was returned by the bank with the endorsement ' refer to drawer'. The averment in the complaint is that the petitioners-accused at the time they made the representation that they would effect the payment after the goods were received at Bangalore had no intention to pay the first respondent the price of the goods they intended to purchase. There is also a further averment in the complaint that' but for the representation made by the petitioners which the first respondent-complainant believed, the complainant would not have sent the goods to Bangalore, There is no averment in the complaint that at the time when the petitioners issued the post-dated cheque in question, the petitioners had no money in the bank or the petitioners never intended to make funds available in their account by the time the cheque was presented for payment. The point that arises for consideration is whether going by the complaint, an offence of cheating has been made out and, if not, should this court quash the complaint in exercise of its inherent powers under Section 482, Cr. PC. 1973.

' A post-dated cheque in payment of goods already received is a mere promise to pay on a future date and a broken promise is not a criminal offence, though it may amount in certain business relations to discreditable behaviour.'

3. In the above decision, Sadasivan J. has also referred to Asad Ali Tahsildar v. Answar Ali, AIR 1959 Tripura 40, wherein it has been held (headnote) I

' It is well settled that a mere breach of a contract cannot give rise to a criminal prosecution....The distinction between a case of mere breach of contract and one of cheating, therefore, depends upon the intention of the accused at the time of the alleged inducement.'

' If a person gives a cheque which is dishonoured and from the circumstances it could be presumed that he must have been aware and even intended that the cheque would be and should be dishonoured, he would prima facie be guilty under Section 420. The position would be otherwise if he had no knowledge then that he had no sufficient money in the bank when issuing the cheque. A post-dated cheque is a representation about a future event, the holding out of a hope rather than the representation of a present fact and if such a cheque were to be dishonoured, it amounts toa broken promise but not to a criminal offence although it may amount to discreditable conduct in business circles. When the accused gives the post-dated cheque for goods delivered, a fortiori no offence of cheating can be spelt out.'

5. In Cheriyan v. Kuruvilla [1968] KLT 279, Sadasivan J., has held :

' The drawing up of a cheque does not imply any representation that the drawer has money in the bank to the amount shown in the cheque, for he may either have authority to overdraw, or have an honest intention of paying-in the necessary money before the cheque can be presented. Giving of a cheque in lieu of money already due, with the knowledge that the drawer has no funds in the bank does not amount to an offence but is only a civil wrong. But if a person gives a cheque which is dishonoured and from the circumstances it could be presumed that he must have been aware that the cheque would be dishonoured, he would be guilty under Section 420.'

' Assuming the allegations of fact made in the complaint are correct it is found that the complaint does not disclose the commission of any offence under Section 420. There is nothing to show that the respondents had dishonest and fraudulent intention at the time when the appellant parted with Rs. 35,000. There is nothing to show that the respondent induced the appellant to pay Rs. 35,000 by deceiving him. It is not the case of the appellant that at the time when the representation was made the respondent knew the same to be false. The fact that the respondents subsequently did not abide by their commitments that they would show the appellants to be the proprietor of the transport Corporation and would render accounts to him might only create civil liability for them, but this fact would not be sufficient to fasten criminal liability for the offence of cheating. Hence the criminal proceedings against the respondents were rightly quashed.'

7. In State of Kerala v. A. Pareed Pillai, AIR 1973 SC 326, the case of the prosecution was that Pareed and Kader, two of the accused, made false representations in respect of the booking of tins of cocoanut oil and thereby induced the other parties to act to their detriment. The plea of the above two accused was that as per practice the demand drafts were sent to the bank without railway receipts. The bank discounted the demand drafts and credited the amounts in their overdraft account. The railwayreceipts in respect of the demand drafts were handed over to the bank only after the goods were booked. This practice was in vogue for a long time and had the approval of the authorities of the bank. The trial court convicted Pareed and Kader, accused Nos. 1 and 2, respectively, for various offences including that under Section 420, IPC. On appeal, the High Court held that the evidence about the transport of empty tins on behalf of the firm of the above accused was not convincing and that the representation which was made by the above accused related solely to the supply in future of tins of cocoanut oil. The High Court further held that as there was no cogent evidence to show that the accused did not have the intention to fulfil their promise to supply cocoanut oil tins at the time of making the representation, the offence of cheating against them was not proved. Dismissing the appeal filed by the State against the above judgment of the High Court, the Supreme Court held (at p. 329) :

' It may be that the accused could not keep up the delivery of the oil tins to the railways and no tins could be despatched in respect of the said 13 railway receipts but that fact can give rise only to a civil liability of the accused. It is not sufficient to fasten a criminal liability on them. To hold a person guilty of the offence of cheating, it has to be shown that his intention was dishonest at the time of making the promise. Such a dishonest intention cannot be inferred from the mere fact that he could not subsequently fulfil the promise.'

8. In R. P. Kapur v. State of Punjab, AIR 1960 SC 866, it has been held (at p. 869) :

' It is well established that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice... It is not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction. However, we may indicate some categories of cases where the inherent jurisdiction can and should be exercised for quashing the proceedings. There may be cases where it may be possible for the High Court to take the view that the institution or continuance of criminal proceedings against an accused person may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice...Cases may also arise where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged ; in such cases no question of appreciating evidence arises ; it is a matter merely of looking at the complaint or the First Information Report to decide whether the offence alleged is disclosed or not. In such cases it would belegitimate for the High Court to hold that it would be manifestly unjust to allow the process of the criminal court to be issued against the accused person.'

' Whether a complaint should be quashed should be considered on the basis of the allegations contained therein and not on the defence that may be put forward by the accused. The allegations in the present complaint make out that the respondent was subjected to criminal intimidation by all the accused. There is also a case that there was mala fides on the part of the accused in cutting open the road putting the concrete pipe. It cannot, therefore, be said that the complaint does not prima facie disclose an offence... The proper remedy of the petitioner is to appear before the trial court and claim a discharge either under.s. 245(1) or under s, 245(2) of the Code of Criminal Procedure.'

10. The question is whether going by the complaint, the petitioners have committed any criminal offence. Even if there is a deception, civil wrongs which are to be dealt with by civil courts are not crimes to be punished by a Criminal Court. In this case, the cheque was issued for the value of goods already delivered. Even though it is not stated in the complaint that it was a post-dated cheque that was issued, the contention of the petitioners' counsel that it was a post-dated cheque that was issued was not disputed at the hearing by the counsel for the first respondent-complainant. A post-dated cheque for payment of goods already delivered is only a promise to pay on a future date. If the promise was broken by the dishonour of the cheque, the liability being only civil, no criminal offence will be there. There is also no averment in the complaint that at the time when the cheque was issued, the petitioners were aware that there was no money in the bank to honour the cheque or the petitioners did not intend to make sufficient funds available in their account by the time the cheque was to be presented for encashment. A subsequent failure to fulfil a promise by itself is not sufficient to infer a dishonest intention which is an essential ingredient for the offence under Section 420 of the IPC. A mere deception or a mere dishonest intention by itself is not a criminal offence. As no criminal offence has been made out in the complaint, the same has to be quashed by this court in exercise of its powers under Section 482 of the Cr. PC.

11. In the result, Ex. P3 complaint filed by the first respondent before the Additional Judicial Magistrate of the First Class, Ernakulam, is quashed and this criminal miscellaneous petition is allowed.